Our Process: How We Invest
The first run of broad-entrepreneur attribute filters is handled quickly and efficiently through 4 quantitative screens applied simultaneously. These filters are applied to a global universe of 55,000 stocks and reduce the selection pool down to approximately 3,000 companies.
Filters in this step are used to identify core team and firm characteristics.
The second step applies additional quantitative filters to reduce our pool of 3,000 companies down to approximately 1,000.
Filters in this step are used to assess liquidity and market cap.
The third round of filters are applied to the remaining 1,000 companies and reduce the selection pool down to approximately 500. We apply a combination of quantitative filters and company-by-company examination during this step.
Filters in this step are used to assess bankruptcy risk, strategies for growth, and compensation metrics.
We then perform fundamental analysis on a firm-by-firm basis and examine recent news stories/developments that cannot be easily assessed with filters. This level of analysis brings us to our Actively managed portfolios with which we seek to beat our own Entrepreneur Universes as well as peer benchmarks.
Fundamental analysis is used to assess traditional valuation metrics, trends, relative comparisons to peer companies, and new stories.
As a general rule, we have very low turnover and are largely a buy and hold shop. We perform quarterly rebalancing based on consistency with our 15 entrepreneurial attributes.